MELIÁ HOTELS INTERNATIONAL: FIRST HALF RESULTS 2024
RevPAR continued its growth path, with a +13.2% in the first half of the year. |
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MELIÁ HOTELS INTERNATIONAL: FIRST HALF RESULTS 2024
RevPAR continued its growth path, with a +13.2% in the first half of the year. |
Category: Worldwide - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2024-08-06
 Photo credit © Meliá Hotels International
Positive performance in Spain in the second quarter, both in holiday and urban hotels, with growth in corporate segment and general direct customers.
Meliá earned €51.4Mn (+11.2%) in the first half and reduced its debt by -€271.6Mn up to June, confirming a positive half year in operations and forecasting a good summer season.
Gabriel Escarrer, Chairman & CEO at Meliá Hotels International
“Meliá's results continue to reflect the positive evolution of the tourism sector in the first six months of the year, in which the group has been able to capitalise on the continued strength of travel demand thanks to the strategy deployed by the company in recent years, now reaping the rewards of its firm commitment to digitalisation, international expansion and the renovation and repositioning of its assets, with a strong focus on premium and luxury products.
In operational terms, we can speak of a positive first half of the year, marked by the full recovery of both the leisure, business and corporate customer occupancy levels prior to the pandemic, a trend which, combined with the strength of the rates, allowed us to record a double-digit RevPAR increase (+13.2%), which extends the outstanding performance (+15.6%) recorded in the first quarter of the year. Consolidated revenues also confirmed this positive trend, amounting to €960.1 Mn up to July, + 5.5% year-on-year; taken in stand-alone, Q2 revenues of €520Mn also maintained the upward curve, and, had they not been affected by some extraordinary factors that impacted 2023, the increase compared to the same quarter of the previous year would have been +9.1%, whilst at the half-year level, the growth would have been +11.7%.
Our Company maintains its priority and commitment to its shareholders to continue strengthening the Balance Sheet, and I would therefore like to specially highlight the progress made in reducing the net financial debt by -€271.6Mn, to reach €892.1Mn, which allow us to feel comfortable with our objective of ending 2024 with a Net Financial Debt/EBITDA ratio below 2.5x.
The first half of the year thus further strengthens our confidence, not only in the favourable business forecasts for this summer - which to date look even better than 2023 in terms of occupancy and rates - but also in the fact that we can comfortably meet the commitments expressed for the end of the year at our last General Meeting, both in terms of EBITDA, RevPAR, qualitative expansion and strengthening of our balance sheet.
Meliá Hotels International has presented its results for the first half of 2024, which show us the excellent business health and momentum of the hospitality activity, a situation that Meliá has been able to capitalise on, recording further improvements in the Average Revenue per Room (ARR) or RevPAR, a key indicator for the hotel industry, which increased by +13.2% on average until June, mainly due to the improvement in rates, although occupancy also recorded increases.
The evolution of revenues, which increased by +5.5% compared to the first half of the previous year and reached €960.1 Mn, also points to a very positive half year in operational terms, although the comparative is slightly distorted by the effect of some extraordinary items in the second quarter of the previous year; without taking into account these effects, the increase in revenues in the first half would have been +11.7% compared to the same period of 2023.
Along with the favourable performance of the hotels in most of Europe, with Germany regaining momentum in the events and trade fairs segment and with the UEFA Cup, a satisfactory performance in Milan and a correct evolution in London, as well as in the main destinations in America and Asia, the Company highlights the good performance of both its urban and holiday hotels in Spain, where the positive economic situation and the increasing touristic positioning of the country favoured increases in RevPAR above the rest of the destinations, (with a higher weighting of the Rate factor in all cases). Urban hotels benefited from the continued strength of the MICE (Meetings, Events and Incentives) and Corporate segments, which have recovered in the second quarter to pre-pandemic levels, together with the rise of festivals and other musical events in various cities, which contributed to the positive result of the first six months of the year. Leisure hotels, meanwhile, recorded a notable improvement in occupancy in the period, accompanied - thanks to the Group's strong commitment to repositioning and improving the product - by a double-digit increase in rates.
The Company achieved a positive consolidated net profit for the period of €51.4M, (+11.2% vs. the same period of 2023) and ended the half year with an Ebitda of €240.3Mn (+10%). On the financial level, the Company continued to capitalise on the higher operating cash generation to reduce its net financial debt to €892.1M (-€271.6M), making progress towards its commitment to bring its Net Financial Debt/Ebitda ratio below 2.5x.
The evolution of 'on the books' bookings together with the excellent results of the 'Wonder Week' promotional campaign carried out during the month of June, confirms for Meliá the maintenance of the positive trend in demand, with an increase in international connectivity and a growing willingness to travel, which is reflected in a higher volume or affluence of customers in the Company's hotels in the main destinations. As a result, the average occupancy rate of Meliá's hotels increased by 3.5 points compared to the previous year. The Group also confirms an increase in the average rates of its hotels, which up to June was +6.6%, as a result of its solid commitment to the repositioning of its assets and the growing focus of its hotel portfolio on the Premium and luxury segment, which maintains (along with superior rooms throughout its portfolio) a higher demand.
New signings and hotel openings
In line with its commitment to sign a minimum of 30 hotels per year with approximately 7,000 rooms, thus consolidating strategic and sustainable growth, Meliá Hotels International has signed 27 new projects up to date, all of them under less capital-intensive formulas, such as management and franchising, in countries such as Malta, where it has signed eight new hotels, Albania (with five new projects), or Thailand, Cuba and Spain (with two new hotels), and a new signature in Greece.
In addition, to date, Meliá has opened 13 new hotels, six of them in Spain, including the emblematic Gran Meliá Torre Melina in Barcelona, the Zel Costa Brava in Tossa de Mar (Gerona), the Meliá Lloret de Mar, two The Meliá Collection hotels in Mallorca and the new INNSiDE Tenerife Santa Cruz.
Following transformation and repositioning processes, Meliá has also reopened the Meliá Ibiza and the Meliá Collection Casa de las Artes in Madrid's classy “Barrio de las Letras". In addition, the group has opened new hotels in Albania (Velipoja Affiliated by Meliá) and Portugal (Innside Braga Centro), as well as in vibrant new destinations such as Sardinia, Malta and Laos. By the end of 2024, Meliá has planned 10 more openings in Spain, Cuba, Portugal, Malta and Mexico.
The Company foresees a strong boost to its luxury brands in the coming years, such as the ME by Meliá brand, which will open three new hotels in 2024 which will be located in Sayulita (Mexico), Malta and Lisbon; also another three in 2025 (in Guadalajara-Mexico, Malaga and Marbella), one in San Miguel de Allende (Mexico) in 2026, and two in 2028, in Albania and Guangzhou (China).
The Gran Meliá brand plans to debut with three large hotels in Dubai, Mexico and Albania, and the unique and singular luxury hotel brand The Meliá Collection will also enter China, Albania and Mexico, as well as continuing to grow in Spain and Italy. In the Premium segment, the hotel brand created by Meliá together with Rafa Nadal, ZEL Hotels, has new openings planned in Madrid and Mexico (2025) and Albania (2027), and the Innside by Meliá brand will arrive for the first time in countries such as Malta (2025), Greece (2025), Portugal and Sicily (2025).
Third quarter outlook
Meliá Hotels International's estimates for the third quarter, (of special relevance for the Group given its strong holiday component), point to a new positive season that would exceed, for the third consecutive year, the results of previous years. The operational trends remain positive and show no signs of slowing down, both for leisure and urban hotels with corporate clients, a segment that will recover its pre-pandemic levels this year.
The Company maintains the forecast made last May to end 2024 with a low double-digit RevPAR increase (with a greater contribution from rate increases than from occupancy) and expects to meet the stated annual Ebitda target of at least €525M in 2024.
Results by Region
Spain
During the second quarter, the Group's urban hotels have maintained a good performance, in which the MICE and Corporate segment, together with the direct customer, have experienced the highest growth. In this regard, it is noteworthy the generation of additional demand due to the events calendar (conferences, sports events and music events), which has been particularly significant in Madrid and Barcelona. In terms of holiday hotels, occupancy growth was accompanied by double-digit growth in rates, thanks in large part to the company's commitment to improving its product, enhancing the hotel experience and focusing on quality, particularly in the premium and luxury segments.
For the 3rd quarter, with record levels of both arrivals and tourist spending in Spain, good results are expected, with growth in rates. In addition, the Wonder Week promotional campaign that the company carried out last June led to an increase in bookings by direct customers, together with a positive sale of superior rooms and a good performance of last-minute sales.
EMEA
In Germany, performance in the second quarter was solid, with several regions exceeding expectations. In addition, the UEFA Euro 2024 and various trade fairs have provided a significant boost to demand. In terms of RevPar, growth here has been mainly focused on volume. For the next quarter, upcoming events together with leisure demand are expected to underpin the recovery by generating a higher RevPar than the previous year.
In the case of France, the preparation of the country for the Olympic Games temporarily reduced Corporate and MICE demand, although the company's commercial strategy has allowed it to maintain a good level of occupancy during the quarter, limiting the impact on RevPar. Following the Olympic Games, strong demand is expected with an increase in rates, both in the MICE and Corporate segments as well as in the Leisure segment.
The UK is maintaining a strong performance and the outlook for the summer season is also positive. London remains the main destination, driving the country's performance and forecasting a positive evolution of revenues thanks to a solid MICE demand complemented by tour operating and Corporate demand.
In Italy, Milan is particularly strong due to the increase in the number of travellers to the destination and the positive impact of the events held in the city. In addition, this Italian capital city is maintaining a good trend in demand for the next quarter and the hotels that the company operates there expect to improve on last year's figures. In the third quarter of the year, Milan Fashion Week will take place, an event that is expected to be positive for the performance of the hotels, especially for the Palazzo Cordusio Gran Meliá hotel, which expects to capitalise on part of the demand thanks to its luxury positioning.
America
In the second quarter, Mexico's business performance did not increase compared to the previous year, with a decrease in MICE volume which, after an exceptional 2023, this year has softened its demand trend due to the fact that a large part of last year's MICE business came from the reaction of companies to the disruption that Covid had caused in their interactions with their employees and clients. For the 3rd quarter, a higher occupancy volume is expected which, although with a slight decline in price, will anticipate an increase in RevPar.
In the Dominican Republic, the increase in arrivals to the destination is expected to exceed last year's figures, which is a positive milestone for the business. The US customer remains the leading one and, despite the significant last-minute trend, thanks to the good customer base and MICE events, the destination's hotels have maintained business stability. Looking ahead to the next quarter, demand from Europe, Latin America and the United States will show significant improvements, benefiting, above all, family hotels with the highest occupancies.
In the United States, the hotel that the company operates in New York recorded growth in rate and occupancy, despite the effect of this year's Easter, which was shifted to the first quarter of the year. In addition, the second quarter ended with the America's Cup, which increased demand. In the case of the Orlando property, various events boosted demand and allowed occupancy to grow. In both cases, an increase in volume is expected for the third quarter.
Finally, Cuba has continued with a slightly upward trend, experiencing a positive performance from the main issuers and, above all, from the Canadian issuer. On the other hand, the domestic customer demand has remained stable for the second consecutive quarter.
Asia
As for China, the destination has registered positive demand thanks to the public holidays during this period, which have impacted with a good performance of the city hotels. In addition, there was a growth in external demand. For the next quarter, the region shows a positive outlook, highlighting an increase in volume as demand, both international and domestic, grows and recovers gradually.
With respect to Southeast Asia, Indonesia stands out, where international and domestic customers have performed solidly, both in the leisure and corporate segments. For the next quarter, business in the destination is expected to be positively affected by the establishment of new direct air connections from 14 Chinese cities. In the case of Vietnam, it was affected by a lower availability of seats available for arrival to the destination by air. However, for the 3rd quarter, demand is expected to increase, mainly due to a boost from the domestic market and higher MICE demand in some cities in the country.
Non-financial Information
Within the framework of Meliá's strategy, the “Responsible Business" lever, which encompasses a series of projects and initiatives in the three dimensions of sustainability, continued to make progress during the first half of the year, with the following highlights:
A.- Regarding Climate Change and Environment:
Progress in the certification of the hotel portfolio in sustainability: with 28 hotels owned and leased, plus 27 hotels owned by third parties under management, which are in the process of environmental certification by the Earthcheck seal.
Investments in energy efficiency: 64 hotels in Spain, Italy, the United Kingdom, Germany, the Dominican Republic and Mexico have already implemented the CO2PERATE project for the monitoring, control and management of facilities and their energy performance. This initiative has also been extended to another 25 hotels operated under management contracts. In total, more than 1,755,000 kg of CO2 emissions have been avoided in 2023, a 10% improvement on the figure for 2022. Likewise, the energy savings achieved through this project amounted to more than 5.5 million kWh (+9% compared to the same period in 2022).
Progress in water management (Magnum project): implemented as a pilot project in two hotels in the Canary Islands and Mallorca, which through artificial intelligence virtually “replicates" the hotels' water installations, improving efficiency in water consumption, identifying anomalies and areas for improvement.
Circularity Plan: in compliance with the Tourism Law of the Balearic Islands, Meliá has defined circularity plans in all its hotels in the Balearic Islands.
Sustainable mobility: expanding the number of electric vehicle charging points in our hotels, avoiding more than 6,390 kg of CO2, and promoting efficient and sustainable transportation initiatives among our collaborators.
B.- In the Social dimension, the Company highlights the challenge posed at a global level by the global shortage and competition for talent, for what has consequently focused on aspects such as:
Talent management: promoting a new vision of “employer branding" to attract talent, under the slogan “Very Inspiring People" (VIP), which seeks to enhance the attractiveness and quality of the tourism industry, holding 12 experiential recruitment days or “Talent days" with a hiring rate of 23.8% of participants, and offering job opportunities to university students during the non-academic season.
Meliá Hotels International was once again recognized in June as the sector leader in the MERCO TALENTO Employer Reputation ranking and was also included by FORBES Spain among the Best Companies to Work For.
In terms of job creation, 4,324 new employees were hired during the first half of the year (in owned and leased hotels), even after having recovered almost the entire workforce during the year 2022. Women accounted for 52.4% of new hires at all levels, with a 57.6% representation in management positions.
The company also continued its commitment to training and development, finalising the second edition of the MBA Business Analytics & Hospitality Performance in collaboration with the prestigious VATEL Spain School of Tourism.
C.- Regarding Corporate Governance: together with the changes in the composition of the Board of Directors that took place during the first half of the year, including the appointments of Ms. Mercedes Escarrer Jaume as Proprietary Director (replacing Hoteles Mallorquines Consolidados, S.L.), Mr. Cristóbal Valdés García as Independent Director (replacing Mr. Javier Campo Garcia) and Ms. Cristina Henríquez Luna Basagoiti as Coordinating Director, it is worth mentioning that the Board of Directors of the Company has at this date 45.45% of Independent Directors and 45.45% of female Directors, thus complying notably with recommendations numbers 15, 16 and 34 of the Code of Good Governance.
 Photo credit © Meliá Hotels International
 Photo credit © Meliá Hotels International
 Photo credit © Meliá Hotels International
 Photo credit © Meliá Hotels International
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